2015 CMA Part 2 Volume 1 Textbook Update November 2014

The 2015 CMA Part 2 Textbook Volume 1 has been revised, and the new document is now available for download in My Studies. The changes are minor, correcting a few small issues discovered since the last publication. If you are currently studying Part 2, it is not necessary to re-study any Sections that you have already studied or to re-print your textbook. The full list of significant changes is shown below.

Section A, Financial Statement Analysis

“Financial Leverage Ratio, or Equity Multiplier” (p. 21): The paragraph that formerly said: “On the other hand, issuing equity to finance assets will cause total assets and total equity to increase by the same absolute amount. Since beginning total assets are greater than beginning total equity, the proportional increase in total assets will be less than the proportional increase in total equity. Since the numerator of the financial leverage ratio will decrease less, proportionately, than the denominator will, the result will be a decrease in the financial leverage ratio.”

has been corrected to: “On the other hand, issuing equity to finance assets will cause total assets and total equity to increase by the same absolute amount. Since beginning total assets are greater than beginning total equity, the proportional increase in total assets will be less than the proportional increase in total equity. Since the numerator of the financial leverage ratio will increase less, proportionately, than the denominator will, the result will be a decrease in the financial leverage ratio.

“Summary and Example” Liquidity Ratios (p. 85): The Cash Ratio for Years 1 and 2 has been corrected.

“Summary and Example” Activity Ratios (p. 86): The Days Sales in Receivables, the Operating Cycle, and the Cash Cycle for Year 2 have been corrected.

“Summary and Example” – “Interpretation of Ratios in the Example” (p. 90): Some additional interpretive information was added to the topic “Profitability.”

Section B, Corporate Finance

“Portfolio Theory” (p. 153-154): “The Coefficient of Correlation (r) in Portfolio Theory” sub-topic was added.

“Derivatives” (p. 203): A definition of interest rate futures was added.

“Derivatives” (p. 209): The sub-topic “Credit Default Swaps” was deleted.

“Derivatives” (p. 217): The sub-topic “Interest Rate Options” has been revised.

“Derivatives (p. 223) and Appendix C: The sub-topic “Put-Call Parity Theorem” was deleted.

“Transfer Pricing and Taxes” (p. 389-390): The transfer pricing examples for Consolidated Lamp have been expanded to add more detail.

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